University Prosecutor, Legal Services Department University of the Western Cape

Courts are under a general obligation to develop common law by applying constitutional values as mandated by sections 8(3), 39(2) and 173 of the Constitution. There have been attempts by part of the judiciary and calls from legal commentators to develop the common law contractual doctrine of good faith. In particular, the question that has occupied judicial decision making and academic writing for some time now is whether the spirit, purport, and objects of our Constitution require courts to encourage good faith in contractual dealings or whether the Constitution insists that good faith requirements are enforceable. The Constitutional Court had an opportunity to settle this question in Everfresh MarketVirginia (Pty)Ltd v Shoprite Checkers(Pty) Ltd1. This article argues that the Court wrongly decided that it was not in the interests of justice to grant leave to appeal. Consequently, the Court’s misdirection and its refusal to refer the matter to the High Court to develop common law to require parties who undertake to negotiate a new term in a lease agreement to do so reasonably and in good faith resulted in the loss of a great opportunity to develop the common law.

The role of the courts in developing the common law of contract in South Africa has assumed great importance and has of late become a subject that has occupied academic writing2 and judicial decision making.3 South African “superior courts have always had an inherent power to develop the common law in order to reflect the changing social, moral and economic make of the society”.4 What appears to have become contentious of late5 is whether this role to develop the common law (which common law has since been subsumed by the Constitution) is an obligation or merely discretionary when viewed in the light of relevant constitutional provisions.6

This article critically analyses the decision of the majority in Everfresh Market Virginia (Pty)LtdvShopriteCheckers(Pty)Ltd7(hereafter Everfresh) in refusing the applicant leave to appeal and concluding that the case did not warrant remittal to the High Court and Supreme Court of Appeal to allow these courts to consider the question of the development of the common law of contract in accordance with section 39(2) of the Constitution. The critique will be presented in the light of the minority judgement of Yacoob J, minority views in relevant recent case law, the normative values of the Constitution and public policy8 considerations. The thesis of this article is that the majority of the Constitutional Court in Everfresh incorrectly concluded that there was no need to develop common law, and in the process missed a good opportunity to play its obligatory role of developing the common law (particularly the principle of good faith which has been in dire need of development for more than a decade now).9

Common law can simply be defined to mean the law of the courts, or in other words the law made by the courts as opposed to the law made by the legislature.10 Courts or judges make law through interpreting already existing rules of law when settling disputes. Common law is an uncodified body of law11 from precedents of the courts that bind those courts or lower courts within the courts’ hierarchy system, a doctrine known as stare decisis. Brand J of the Supreme Court of Appeal (hereafter SCA) opines that the system of developing common law through precedents has over the years provided the South African judiciary with a “medium to develop our system of uncodified common law”.12 By modifying, extending, or supplementing the common law principles, the courts seek to keep the law “in tune with changing social needs and values”,13 Brand J argues further. It is within this context that courts are expected to develop common law using the “objective normative value system” provided by the Constitution as per the Constitutional Court dicta in Carmichele v Minister ofSafety and Security.14

The article has basically five parts. The first part introduces the thesis of the article. The second part locates the analysis or discussion within the context of relevant legal framework and interrogates the question as to whether the role of courts in developing the common law of contract is obligatory or discretionary. In the third part, the background to the Everfresh case will be given (that is, the factual and legal issues in the case). The fourth part will analyse the judgement and provide a critique thereof in the light of the dissenting judgement in Everfresh, recent case law developments and public policy considerations. The fifth part is a conclusion.

This discussion is located within the context of the constitutional framework. The supremacy of the Constitution,15 a celebrated development in South Africa, means that all laws enforced in South Africa and applied by the courts, including the common law of contract, now derives its force from the Constitution16. Christie makes a valid point when stating that “the Bill of Rights in the 1996 Constitution has already had a considerable impact on the law of contract, and will continue to do so”.17

The Constitution has impacted on the law of contract in some critical ways, two of which we will shortly turn to. Firstly, the Constitution has provided for horizontal application of the Bill of Rights and secondly, it provides for the constitutional mandate on courts to develop the common law in some of the provisions that will be discussed in 2.1.1 and 2.1.2 below. The link between public policy and the Constitution and its role thereof in the development of the common law will also be considered.